Doing something about it

Most people wait for things to happen and are disappointed when they do not.

Most people miss opportunities in front of them everyday. They think opportunities are supposed to fall into their laps.

They don't. Things don't come to those who idly wait.

Go get it.

Yahoo! Advice

Annie, David and I got to meet with Tim Reilly a couple weeks ago. He was one of the very early major business development guys.

Here are Annie and my notes from our meeting:

* Tim came on in his role when there was 50 people
o 40 surfer/engineers, 10 business related people

* Culture really evolves from the people you are hiring - A people hire A people, B people hire C people

* The key to Yahoo's early success was all about their hiring culture -- this was the most important function in the entire business
o Risktakers
o Look at the last page of the resume to gain insight into the kind of people they were
o Candidates who were open to facing adversity
o Critical thinkers
o Candidates who know how to deal with rejection
o Fit more important than background
o Ability to zoom in and out --> dig into a problem and then zoom out to 50,000 feet
o Ability to understand the vision and solve problems
o Continuous learners
o People who were nimble and could make decisions quickly and MOVE ON
o No egos

* "We were making everything else up as we went along"
o Same with XChange - we are in the Private Market. Like the Wild West!

* Continue to Think Bigger
o Adidas - "Impossible is Nothing."

* We always emphasized teamwork and good communication
o We had people come in to do 360s -- (we can do that internally at XChange)
o We had a community that emphasized teamwork --> this lead to peer pressure
o Salary and bonuses based on how your team did
+ Engineers, Sales people, Business Development were all on the same team
+ Promoting constant collaboration
+ Team Building/Team Pain

* Mediocre people - "DEATH OF THE COMPANY"

* Thoughts for Running an effective meeting
o Don't meet if you can convey it in a quick email
o Set Objectives
o Provide Agenda
o Assign Meeting Prep if necessary
o Leave with Key Next Action Steps

* Care about the customer more than anything - lose if you outsource customer service

Goldman Sachs – Next Wave IPO Forum

- IPO – Heart of Goldman Sachs
o Commitment to tech
o L-T market leadership in technology financing
o Success w/ IPO franchise
o #1 M&A advisor
- Rally in context
o Restored Confidence
o Fear of missing rally
o Moderation of Volatility
- Bull vs. Bear Case
o Bull
 Government intervention working
 Economic data points are positive
 Corporate profit declines slowing
 Fear of missing rally
 Market is cheap
o Bear
 Macroeconomic data remains bleak
 Recovery slow – muted
 Corporate profits decline continues
 Intervention risk remains
 Massive inflection
 Rally lacks conviction
- What makes a good IPO?
o Formula – Characteristics
 Management
 Earnings
 Sector
 Cash-Flows
 Growth
 IPO Discount
 Track Record
 Conservative Financial Projections
o Components
 Sector
 Stage of Growth
 Earnings Drivers
 Management Track Record
 Proper sized/structured transactions
o Early companies that IPO
 “Need to be bigger”
 Scale and Profitability

 “Catalyst – Economic Stabilization - Market Easier to Access”
- Other Thoughts:
o Growth – out perform Value during rally
 Technology is a big benefactor
 Technology is up 35%
 Investors moving into later-stage cyclical
 IT Survey more positive – “Recession fatigue”
- Closing Thoughts
o IPO Market Open
o Investors Looking for new growth stories
o Supply/Demand favors issuers
- Panel – “The IPO – Lessons Learned from Senior Executives”
o Advice
 Predictability
• Very good forecast – no positive or negative surprises
 Maturity
• Space Shuttle – when you go for the IPO – don’t drop the booster rockets and fall back to earth!
 No Doubt
• Go when you go – don’t get on file and wait for the right time
o How to best achieve
 Maturity and Predictability
• Business model, expense
• CEO, CFO, Sales – good at hitting numbers
 Not to do
• Wait too long to hire good public CFO and finance team
• Stop while started
• Blame the auditors
 Cost of Compliance
• 404, SARBOX, Malpractice, Registration fees - $1-2m+
 Board – need a great board
• Need operators – not just VCs
• Difficult to change board members
 Choosing Underwriting Team
• Pick one horse
• Other firms may give you more research following
 Road-show Process
• Grueling process - Childbirth
• Don’t know until the end
• 90 meetings in 2 weeks
• International is not that important
 Public Market Pressure – Significant
• Little room for anything
• Don’t spend too much time with investors – cap at 5% of CEO time
• Hit your numbers
- Buy-side Comments
 Charles Ellwein – Capital Research Global Investors
• Focus on public - $9b Small cap fund - $660B AUM
• When looking at a company
o CEO – is this someone I can trust, consistency
o Red Flag if they don’t know their business well enough
 Ajay Diwan – Seligman Investments
• Cross-over investments (public and private)

Papa's Recent Picks

Papa – list of 20 names for long-term investment - still keeping in cash till next pullback - then:
- GLD
- DNA/AMGEN
- QQQQ
- AAPL/GOOG
- COSCO
- Midsize Growth
- Copper
- Homebuilder
- NTFLX
- Gilead Science
- TWGP
- Cal Water Service
- Stayer Education
- EADE
- EEM
- Commodity – Lumber
- BRINKS
- Akamai – infratech
- Comcast

Quarter-Life Crisis

http://www.eyeweekly.com/city/features/article/55882

This is something I have thought a ton about recently – some I have felt – and even more what I have seen or heard from friends trying to figure their own path out.
It is interesting to see how because of the close to infinite options we now get to consider at any moment – as compared to in the past where our parents or their parents were restricted to much more limited universes – you see people overwhelmed to the point of paralysis.

Social networks aren’t all evil – they connect us with other who we might normally not be – and reinforce the bonds of already established friends. The problem is that you end up connecting with too many people and that the ties to any individual relationships become weaker. There will be a backlash to the social network lifestyle that has emerged – and I think it will only get worse to those growing up with it from a young age.

The real problem this generation falls into with many girls and guys at this age is an unwillingness to figure out who they are and too much cynicism based on tremendous insecurities. Not willing to have real conversations, not willing to go against what is ‘cool’, and willing to let others treat them in ways that they are not proud of.

I got a great quote sent to me today – “Your Only Fear is Possibility.” Our generation is a great example of that in action (inaction…). There will always be opportunity costs – but making decisions and going for it is what it comes down to. My Grandfather said that he felt that both people he has met of my generation as well as privileged young adults don’t have that fire to make them want to succeed quite like his generation. You have to find it yourself.

“Being paralyzed by infinite possibilities. Even though I know what I'm doing now isn't what I ultimately want to do with my life, I find it hard to take the next step b/c it might not be the 'right' step. When you have everything at your fingertips, it’s terrifying to think you might choose the wrong option. I think what this article, and conversations with people like you remind me of is that any action is superior to inaction and it's ok to fail as long as you challenge yourself to keep learning and keep being excited about what is next.

I do think that the general discussion of what it means to be in your 20s overall is also worth studying. As you said, the timing of life stages are so different for our generation -- most people our age (myself the exception, clearly haha) won't even consider the idea of marriage b/c they search for independence, while at the same time relying on their parents for many things. I sometimes wonder if it's this inherent contradiction b/w quest for independence and realistic dependence that contributes to ongoing strife and lack of identity in the 20s.”(from a close friend)

(With regards to relationships), I’ve found myself close to the right place at the wrong time, the wrong place at the right time, and the wrong place at the wrong time. But so far – have not found myself at the right place at the right time yet. Marriage and kids is something I am very excited about. But just like you – I take it very seriously (unlike I think much of our generation will). I think the divorce rate will increase to 70% by the time we are older.

As far as jobs – I realized that I love starting things. I like having my opinions and ideas valued. A start up is the best place for that. If it is a financial exchange today – in 10 years it could be a water purification biotechnology process. I love learning and interacting with people – and this gives me the chance to do it. My Myers Briggs results were mixed INTP/INTJ which is a combination of an architect/mastermind personality. This works for me.

You will find the role you want – and you will be very successful throughout your life. One thing you have to remember – enjoy this whole process along the way.
When we went to NCAAs for UCLA in 2004 – our coach sat us down and told us to remember what it is like to practice the week before, remember the pre-final dinner banquet – take it all in. You can have your ring from the national championship – but what is really valuable is the experience and memories associated with it.

Most people’s first jobs could sometimes be considered a very negative experience if looked at them that way – but I don’t. I learned a ton from both my experiences from skill-sets to have and how not to do business.

Whatever you do – it will build you and your ability to do more down the road.

Genetics, Data, Money and Gambling

Over the past couple weeks, I have been lucky enough to get some great reading done. Why Beautiful People Have More Daughters, Rigged, The Poker Face of Wall Street, Made to Stick, The Imperfect Heart, and Super Crunchers are the books I have been spending my time enjoying. "

Reading the book "Super Crunchers" - we learn about how regressions help companies make more accurate predictions about, for example, what a person might buy or prefer.

The book "Super Crunchers" made an example of predicting future wine prices based on a formula that accounted the number of rainy days in a growing season and other variables. The formula was very accurate. Some dating sites claim to have developed metrics about what a person might like in a mate based upon a set standard number of questions. Even if it's not what they think they would want. A lot of Web 2.0 sites are using regression data from consumer behavior to fine tune the site's services and offerings." - Highly recommended


An Invisible Heart is a play on words for the economic idea of the invisible hand that regulates the market. It is an endearing book that makes economics enjoyable and can help any lay person understand the major concepts, which make Economists stay in their fields. A well respected friend recommended it to me, and I am now recommending it to you.


Made to Stick was a follow up on Malcolm Gladwell's book the Tipping Point. The Tipping Point explains the Law of the Few (Connectors, Mavens and Salesmen), the Stickiness factor, and the power of context. Made to Stick explains the Stickiness factor. "The book's outline follows the acronym "SUCCES" (with the last s omitted). Each letter refers to a characteristic that can help make an idea "sticky":

* Simple — find the core of any idea
* Unexpected — grab people's attention by surprising them
* Concrete — make sure an idea can be grasped and remembered later
* Credibility — give an idea believability
* Emotion — help people see the importance of an idea
* Stories — empower people to use an idea through narrative
I would definitely recommend the book "Made to Stick" for any person who wants to understand how to make an idea be best presented to the world.


Rigged is Ben Mezrich's follow up to his widely popular "Bringing down the House" book. Described by Amazon as about a character who, "After conquering the hallowed halls of Harvard Business School, he enters the testosterone-laced warrens of the Merc Exchange, the asylumlike oil exchange located in lower Manhattan. A place where billions of dollars trade hands every week, the Merc is like a casino on crack, where former garbagemen become millionaires overnight and where fistfights break out on the trading floor.

This ordinary kid has traded Brooklyn for the gold-lined hotel palaces of Dubai. He keeps company on the decks of private yachts in Monte Carlo—teeming with half-naked girls flown in by Saudi sheiks—and makes deals in the dangerous back alleys of Beijing."

Unfortunately, Rigged falls way short of being necessary for the pages it was written on. It should have remained as a good journal article.


Why Beautiful People Have More Daughters is a great introduction to where Evolutionary Psychology has come in its short history. A mix between science, sociology, and econometrics. I enjoyed their "Savanna Principle" explanation, but unfortunately - the author's might use it to try to explain a little too much; from woman's lower pay to why sons reduce the chances of having a divorce.

The Pokerface of Wall Street was a let down after the 1st chapter. Aaron Brown does give some great comparisons to what wins in poker and trading. Most of it comes down to being about to identify opportunities, take and manage risk. Brown also throws off my interest on the non Texas Hold'em gambling examples.

Three Signs of a Miserable Job

This book definitely could be taken as touchy feely. As a soft approach to management. As what managers should not waste their time with. Anytime spent on this crap is not focusing on the revenue growth or how it moves to the bottom line. Now maybe that is true, but in the services industry; restaurants, hotels, consultancies, auto-mechanics…anyone working with anyone else, other than revenue and profitability margins, customer service and satisfaction are directly or indirectly correlated to employee satisfaction and enjoyment with their job. “The dissatisfaction of employees has a direct impact on productivity, turnover, and morale, all of which eventually hit a company’s bottom line. What we learn is it’s not always about the money (or at least, just about the money).

Patrick Lencioni (the Author) proceeds to discuss how many CEO’s and professional athletes can feel the same sense of dread going to their jobs as a fry-cook or Tupperware salesman. People making millions of dollars a year can be miserable in their jobs, while some people who make little or no money can love what they do – like a volunteer or a high school volleyball coach. The author decides it is not a problem of ‘bad’ employees, that some jobs just aren’t as glamorous as others, or that if only a person made ‘x’ amount more an hour or a year- he’d be much more happy with his job.

Lencioni argues that instead, it is the manager’s job and responsibilities to not only motivate and train their employees, but to actually help them become aware of how they fit into the bigger picture. There is no reason the most adults who work over 8 hours a day at their jobs are dissatisfied. Patrick goes on to argue that the ‘Three Signs’ are Anonymity, Irrelevance, and Immeasurement. He feels that these three factors will make any job miserable, and it is the manager’s responsibility to help employees measure their contributions and find how what they do is relevant while also finding a way to be genuinely interested in their lives. People sometimes have some of one or two of these at their work but those truly happy with their jobs have a great balance and culture that addresses these issues.

Anonymity – People cannot be fulfilled in their work if they are not known. All human beings need to be understood and appreciated for their unique qualities by someone in a position of authority.

Irrelevance – Everyone needs to know their job matters, to someone. Without seeing a connection between the work and the satisfaction of another person or group of people, an employee simply will not find lasting or fulfillment.

Immeasurement – People need to be able to gauge their progress and level of contribution for themselves. They cannot be fulfilled in their work if their success depends on the opinions or whims of another person, no matter how benevolent the person may be. Without a tangible means for assessing success or failure, motivation eventually deteriorates as people see themselves as unable to control their own fate.

What is amazing about the problem and remedy that Lencioni describes is that it is effective and simple, but barely used. It seems obvious and ridiculously simple that most people might think that it doesn’t need to be said. Well it does. Everyone deserves to find fulfillment in their job and not spend their Sunday’s fretting over the upcoming week.

Money and Banking - Subprime Crisis

Thanks to a good friend, I was able to sit in on a special guest lecturer, Kent Vickery from Carrington Capital, discussing the reasons, importance, causes, and predictions of the recent subprime situation. In Alex Gould's Econ 111: Money and Banking Course.


To preface the lecture - Alex discussed how 1. you don't want to be in a subprime mortgage - so keep the FICO score above 650 (a score between 720-850=99% chance to pay back) and 2. the psychological impact of the herd mentality. (They also compared the VC community to lemmings...another topic :) )

*for scale - in today's terms - the S&L Crisis would be $800B of losses

Kent's Points of Subprime:
1. Subprime Crisis is Nasty - $400 Bil of estimated losses
2. $300 Bil losses in US markets already
3. Ripple effect - A. US: property meltdown - 44.5M households will lose approximately $223Bil in wealth over 2008 and 2009
B. Globally - technical default after subprime resets
4. Disgruntled investors will be leading in litigation's to Investment Banks
5. History and How - went through 2/28 arm loans and just with a house of $675k house value and a loan of $417k, the difference in payments over 3 years between a conforming vs. a non-subprime borrower is $59,000 after taxes! At resets, price jump is too high and people cannot make their payments. "When things get tight, the BEAST must eat."
6. "Shadow Banking Bomb" CEO of PIMCO, anatomy of subprime CDO. People's ability to refinance/repay increases as their equity and value increases.
7. GSAMP Slide - Deutsche Bank Trust Reports: 12 Tranches, 10 investment grade
7/10 downgraded to junk, 4 have been wiped out. Cramer video - "no idea how bad it is", Idea: let market wash itself out, but election year so not politically possible. Goldman Sachs may have shorted the market when they saw the tranches slump.
8. Ripple turns into a tidal wave - like Enron crisis - or fall of LTCM

In banking "devil is in the details,"
Interesting idea from Ben Stein - investment banks (Goldman) center point for class-action lawsuit. Necessary information for litigation: EMAIL TRAFFIC: b/t Goldman and Deutsche Bank, outside underwriters, and credit agencies. They had default information and were still selling CDOs - so they made money on the shorts...shady.

Alex ended the final class with four points:
1. Cherish your relationships
2. Options are valuable
3. Trust your gut
4. Go out and get it

The worst thing that could happen to you; too rich, too beautiful, and peak too soon.

He then ended with a great speech. Anna Quindlen's commencement address to Villanova University, Friday 23 June 2000.

Copycats

In economics - when there is an excess profit in a market - companies will enter the market until the supply increases to a point, which lowers the price of the product and eats away at the profit. This idea holds true in all(most I can think of) marketplaces; recently - lemonade stands, airlines, restaurants, and recently technology startups.

"Can You Clone Tangler For $1,500?" is the headline of a Techcrunch article today.

"Someone in Turkey is willing to pay up to $1,500 to anyone who can “clone Tangler.” But don’t go too far - the listing also states “do not steal tangler.com images and do not violate copyrights. The clone should have the same functions, but the design should look different.”

A company that offers this is http://www.getafreelancer.com/. It is hard to imagine getting the best quality in just two weeks for <$1,500 to try to mimic some of the top web 2.0 technology site out there.

We'll see how this goes...

Financially Blogging again!

With markets as volatile as they have been recently, I felt it was about time for me to start blogging again. Just recently I have come across a couple of very solid tools for different investment strategies. Unfortunately, sometimes, the more information we have, the higher chance that we get confused and miss glaring opportunities.

A few recent financially-oriented companies have been popping up and have been very impressive.

Market Simplified is just that. Market Simplified is a financial vertical search tool which attempts to provide concise semantic answers to financial queries. You can ask it any question you want about the market, equities, and investment strategies - and it should have an answer in 10 seconds flat.

Not to be outdone, FirstRain has come out with a very similar product - yet more people involved. They actually take these questions and queries and have them answered in a research shop overnight in India. Has a really solid management team and should look to be a more serious player in for the institutional investors doing research.

GStock is a pretty interesting stock search engine that gives BUY and SELL ratings based upon simple trend analysis, which allows them to beat right on 2 out of 3 trades. Unfortunately, the average gain above market over the past 3 years was only 2%. It will be interesting to see how this company does.

Options-Research is another one of those "newsletter" beat the market trading sites. September '07 Results that only plays the options on a couple major ETFs, DIA and QQQQ, and some major public technology companies, AAPL, EBAY... It will be tough for them to keep their 2006 monthly avg of 73% returns.

Optionetics is a great company and they must have a contract with Yahoo Finance. Their Option Screening Tool is very helpful in finding the best priced option for a security you might be interested in playing based upon risk/reward profiles and odd probability that the option might take off

Redefining Luxury as Necessity

In economics, a luxury good is a good for which demand increases more than proportionally as income rises, contrast with inferior good and normal good. Luxury goods are said to have high income elasticity of demand: as people become more wealthy, they will buy more and more of the luxury good. This also means, however, that should there be a decline in income its demand will drop. It must be noted, though, that income elasticity of demand is not constant with respect to income, and may change sign at different levels of income. That is to say, a luxury good may become a normal good or even an inferior good at different income levels, e.g. a wealthy person stops buying increasing numbers of luxury cars for his automobile collection to start collecting airplanes (at such an income level, the luxury car would become an inferior good).

My argument is not that this is true, not that these good should be avoided, but more people than thought of before should be living the life of luxury. My goal, through taking the ideas used to value a company, is to use discounted cash flow analysis to show the actual future value differences of regular vs. luxury goods that we see everyday. From the lady who invented the little black dress, "Luxury is extremely superfluous, but extremely necessary," observed that legendary trendsetter, Coco Chanel.

According to dictionaries, luxury is something that is not necessary for life but can make it more enjoyable or comfortable. Sumptuousness and extravagance are a couple of synonyms for luxury. Unfortunately/fortunately, these dictionaries are right and wrong. It not only makes life more enjoyable and comfortable, but for the lives we live in today's society, spending more makes sense.

Now, I am not promoting paying more than something is worth, but not settling for anything less than the best. Best mattress, best suit, best car, best life. If you do your necessary due diligence, luxury goods hold their value better and your enjoyability with the good is much higher (debatable).

I will try to do this exercise with a couple of examples; durable goods that can be found everyday that both have common and luxury substitutes. Some examples mentioned were clothing, automobiles, and mattresses. I would appreciate any thoughts you might have as well.

Stock Market Social Networks - Find the Next Warren Buffett

Recent start ups Stockalicious and RockYourStock are the next wave of investment tools that can be used by easily misled beginners all the way up to easily misled expert investors. These social communities could be great at offering investment advice without getting charged hefty fees. Also could be dangerous because of easy manipulation.

Stockalicious.com is "a clever site that helps you examine your investment habits by putting all of your stocks in one place. By looking at your trading habits on the site, you can see when you purchased stocks, whether you are trading too early, or if your portfolio holds up against the market, and even personal notes about why you make trades. If you think all of this info should be spread around to your buddies, you can spam your friends. On the other hand if you’d like it to remain private, you can embed your portfolio in your blog. All you have to do is register for free to get started on your portfolio."(K)

From Stockalicious you are able to watch how others are faring in the market and if you notice someone consistently making the right moves, you could copy his portfolio.

On the other hand, RockYourStock "is a funky cool, high-octane and constantly updated website that brings the investment world out from the grey towers of Wall Street and puts it into context for you, the everyday consumer. Each day we’ll blog on companies that you interact with all the time to bring to light ‘hidden gem’ investment opportunities."

It can make investing a little more fun. They have four featured portfolios on their site; the fruitbasket, bastard fund, granola fund, and icebucket. Description of the bastard fund: "The stocks chosen participate in activities or manufacture products that many consider sinful. We at Rock Your Stock are agnostics. We only care about the business. We’re not here to judge anything or anyone; except for the quality of investment."

Look to leverage long the stock picking social networks, because at least now you can do what everyone else is doing...

No Idea's Original

A couple of months ago I was talking to my (PE/now VC) friend about where the next big plays in the technology/web 2.0 would be. Somewhere it came up that using high technology to do low-tech things. It also came up that both of us were trying to improve our vocabularies, and the way he had been going about it is keeping track of words he had not known or was interested in adding to his lexicon through an excel spreadsheet. I suggested that someone make online flash cards or a system similar to flash cards that could be used to study anything. Well, Quizlet did it.

This is a great idea; think of students in classes studying vocabulary or terms, think of actors remembering prompts, think of anything and everything that can be written on a card can now be saved and viewed by anyone.

Although this is the second(1st was the Sony Reader: basically an iPod for eBooks) time in the last year where a good idea of mine has been released by someone else, it makes me happy to see that is is successful (confirming the good idea) and making our experience on this rock a little more enjoyable. One thing it proves once again is that no idea is original.

As Nas would say:
"No ideas original, theres nothin new under the sun
Its never what you do, but how its done
What you base your happiness around material, women, and large paper
That means you inferior, not major"

Look to leverage long the eBook and Quizlet. Unfortunately Nas' hold ranking remains unchanged.

Market Makers

A new company, Trendio.com made it's debut on killerstartups.com today. "Trendio takes the high pressured, fast paste(paced) world of the stock market and turns it into a game. Instead of actual stocks, key words are used as the trading item. The amount of times that name or word is mentioned in the news the next day determines how well those stocks are doing." But unlike a real market, these participants are unable to generate any material gains.

Although it isn't exactly the same, it reminded me of two other recent(ish) start-up that were exchanges themselves in weather and professional athletes, respectively.

"Basically the way they make money is Weatherbill's algorithm will usually be better than you at guessing the variance of cooling/heating degree days, so they can price their contracts with a premium. The small risk of error they have calculated and already sold to masticulating hedge fund analysts in NYC. Their premium is going to eat into your profits no matter what -- it's decided by the insurer, not the market. This is why people use insurance for low-probability, high-impact events and futures for high-probability, low-impact events (like weather); you just keep getting screwed by overhead otherwise. "(DL)

The third example of this created market, and more similar because of the not REAL money being traded in it, is protrade.com. Protrade sets the athletes prices and people (investors) trade these athletes based upon the fantasy points they think they will achieve during the season. Price move up/down based upon trading pressure. Then the season ends with earnings day. Unfortunately these earnings are in FAKE dollars. Because of all the online gambling laws, Americans are unable to recklessly throw their money away online, yet can do so with other markets (NYSE, Nasdaq, AMEX...Shanghai Stock Exchange) and find forms of gambling without much effort.

I am definitely a fan of these types of start-ups. In "Trading Is Taking to the High Seas: Freight-Rate Swapping Lets Investors Wager On Costs of Shipping" By Ann Davis on January 4, 2007; Page C1 of the Wall Street Journal, we see that investors are always looking for new alternatives to invest or gamble on, in this case it is tracking the timing of shipments and buying contracts on the amount of time they will take to be delivered.

As an investors you might be in a tough position because the arbitrage opportunities might become eaten up by the high premiums on the contracts. But my good friend DL suggested "However, if you think like an entrepreneur you realize that you can do this with basically any security, repackaging it using Ajax to seem like a new offer. You could do this with options, with swaps, even with **** like treasuries. "Buy ***** School community bonds!! Customize your issue based on your kid's AP score! We will only take a 10% premium for making you feel cool." Schmucks will line up for X number of months, and you are guaranteed money."

I would look to leverage long these market makers, especially if they get the ability to allow investors to use REAL money.

Project San Dimas

eBay seems to finally be rethinking their user experience with the announcement of a new Apollo application currently called "Project San Dimas." The new application is meant to make buying and selling items on eBay more efficient, competing with third party “Power User” auction service. "No word on whether it was named after the patron saint of reformed thieves (fraud detection?) or referencing the quiet suburb that served as the backdrop to “Bill and Ted’s Excellent Adventure”."(Ajax Blog)

San Dimas features a user interface created by Effective UIand uses eBay’s API’s to make creating, and managing auctions easier and faster. Because it’s written in Apollo, the program can improve performance by cutting down on repetitive requests for data, caching it locally instead. The application will also feature real-time auction monitoring and allow sellers to add in pictures directly uploaded from webcams and cameras.

Now the application is pretty remarkable in itself, but the real significance of this release is that it highlights an increasingly competitive marketplace, which previously had one major player; Adobe. Now Adobe Flash and Microsoft Silverlight are in a broader battle over how Internet services and software will be built in the future. Both want to be the key supplier of cutting-edge software that handles functions like video and animation on the Web.

Just like any competitor trying to save face (by thinking the best defense is a good offense), Adobe made an announcement about moving into Microsoft's Windows Media Player Space with their own Adobe Media Player. Unlike the "Freddy Vs. Jason" or "Alien Vs. Predator" films where "No matter who wins, earth loses" attitude, this Adobe vs. Microsoft competition can only make our media experience more enjoyable.

Because it is so unpredictable who will win with both sets of products (if I had to guess, Adobe Flash and Windows Media player are the winners in their respective groups) I would Leverage Long both of these products and make up the loss from the premiums on the gains from the winner.

Un-American : Howard Stern and Sanjaya

It is no surprise that Howard Stern fully supports Sanjaya. They are brothers. Just look at their long brown hair. Look at their top teeth only smile. Look at their big protruding noses and tell me they aren't related. They have both gotten famous by doing something poorly: Sanjaya with singing and Stern as a radio host.

As much as I dislike American Idol, it is an opportunity and pissing contest for Americans to assert that they are winners. With people like Howard Stern and his following Voting for the Worst, outsiders are able to see the American Dream be undermined by no talent clowns.

The problem with this is that it still creates the stir and buzz that these shows need. Slander or praise is still free advertising. People are actually texting in to vote more now because there is now more competition to keep the best or sabotage to vote for the worst. Look to Leverage Long the American Dream and never think about Howard Stern or Sanjaya again.

fotowoosh - bringing pictures to life...giving me motion sickness

These two seemingly boring 2-D pictures of a train and a building can be transformed into moving 3-D pictures of the same objects. This program will turn any image (preferably an outdoor image) into a 3D model. Freewebs just raised $11 million in August 2006 and draws around 18 million visitors per month.

Microsoft is working on something related to this in their Live Labs group called Photosynth. The product will construct a 3D model based on lots of photos of the same thing or general area from different angles. Unfortunately for Microsoft, Freewebs fotowoosh is able to deliver with just one picture. Look for Freewebs to be gobbled up in the near future by a video sharing/mashup site, a social network, or GOOG/MSFT/YHOO. Definitely look to Leverage Long.

Disruptors...What's Next?

Everyone loves disruptive technologies...well, except for the disrupted. A disruptive technology is a technological innovation, product, or service that eventually overturns the existing dominant technology or product in the market. Think Steamships and Sailing ships. Think automobiles and horses. Think muskets and crossbows. Think iPods and compact discs.

But are there any true disruptors? "Clayton M. Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is strategy that creates the disruptive impact." My favorite disruptive technology/innovation is one that does away with all of the inefficiencies in a certain market.

Like Chris Anderson's "The Long Tail," in the music market, music stores(Tower Records or a Wherehouse) had gross inefficiencies in offering the amount of music because of cost of storage space. Online retailers had much larger warehouses and were able to make their way down this tail capture a sizeable piece of these inefficiencies. Companies like Apple, with iTunes, and Rhapsody were able to take this to the next level and become perfectly efficient and in doing so created niche markets for specialized music tastes. These disruptions changed the music industry as a whole. Getting every listener the ability to get to the music he wants to listen to.

Another example of this, which was brought to my attention from my Grandfather, is when the Investment Banks began to lower trading commissions for their securities. Although no special technology was involved, the ability for investors to execute trades at 1/8 of the previous price completely changed (increased) the opportunities available. Day trading became much more common and profitable.

Some recent examples of great new disruptors who I think are doing it right take an example right out of eBays playbook.

www.Zillow.com free real estate platform with good valuations
- Help home buyers and owners with finding value, buyers and sellers. (New version real estate brokerage)

www.Zopa.com (peer-to-peer lending)
- Helps find good rates to lend and borrow money.
(New version of a bank)

www.Odesk.com (The On Demand Global Workforce)
- The marketplace for remote work.
(New version of a staffing company)


I look to Leverage Long Odesk, Zillow, and Zopa. Look for these three and maybe a few more to really shake things up. Out with the old guard.

When it comes to TVs, Bigger is Always Better

For all of you out there looking to get a TV, you probably should use CNET.com or Techbargians.com. They do a good job reviewing most everything out there so at least you'll be making a more informed choice on big decisions. What one of these sites should really do is keep reviewing products, but similar to Kayak.com, code in AJAX so you don't actually have to go from page to page. I also think the sliders that Kayak offers are fantastic.


I ended up getting a JVC HD 52 Inch Rear- Projector. Now for all of you anti-rear projectoristas out there claiming the LCD or the Plasma is the only way to go, you are very wrong. If I want to spend more then I spend to get a great image on a small screen, I would buy an iPod Nano or an LCD/Plasma. I like that there is some good reviews on it too; "Relatively inexpensive; excellent black-level performance; still the best picture quality in a proper environment with proper setup."

LCDs and Plasmas a great, but not great enough for me to be willing to pay the prices for them. LCDs are "Relatively expensive; home-theater image quality generally not as good as on plasma models; relatively narrow viewing angle." Plasmas are also "Relatively expensive; slight potential for burn-in; generally lower native resolution than similarly sized LCDs."

Look to Leverage Long big TVs and never buy a small TV*. If unfortunate enough to find yourself in the possession of a small TV, it still may be used as a paperweight, mirror or chair.



*Small TVs are considered smaller than 50 Inches.

So you want to Start a Hedge Fund...

With all the press hedge funds have been getting recently, it isn't a surprise that 1,518 hedge funds launched in 2006 with about the same amount failing.

Hmmmm...let me guess why so many people want to be a Hedge Fund Manager? Maybe it is because the amazing returns that can be attained skyrocketing winning manager into the categories of the super-rich. "A $1 billion fund posting a zero percent return can still spread around $20 million to its employees. The best managers do a lot better than breaking even, mind you, and as a result, a handful of hedge-fund kingpins take home more than $500 million in annual compensation."

Unfortunately, because of these new entrants, average annual performance has been declining over the past fifteen years. That isn't going to stop investors from putting their money into new and old funds, funds of funds, and now the fund of fund of funds.

If you want to start your own fund, and you should want to, you can use a turn key site and pay around $60-80,ooo to set up. They also will help you when deciding how to find investors. You can also do a little more work and save some money by doing this whole process yourself. You need to set up a back office, a relationship with a prime broker, a good accountant and have a trading account. It also helps to have a good track record for the system you will be using to show investors what they are getting into.

Definitely Leverage Long Hedge Funds and being a Hedge Fund Manager. Except for Ken Griffin. If not careful, he too will go down like like Icarus.